Why do African multinationals invest outside their home region? Should they?

Abstract

This study draws on preliminary case evidence to explore the motivations and advisability of nascent African MNEs’ engagement in outward foreign direct investment (OFDI) activities outside their home region. It complements recent research on MNEs from emerging markets, which has dominantly focused on the BRICS (Brazil, Russia, India, China, and South Africa) economies, with virtually no attention to potentially important players from rising Africa. The MNEs explored in this study originate from the energy, manufacturing, construction, chemicals, agribusiness, extractive/mining, and financial services sectors, and they have investment footprints in several economies of the Global ‘South’ and the advanced North. Their OFDI moves to both economic groupings seem to be commonly motivated by the search for market opportunities, strategic assets/resources and performance-boosting relationships, though more advanced economies appear to attract more strategic asset-seeking FDI from nascent African MNEs. The paper argues that intraregional investments by African MNEs should continue to attract primary attention, but selective and strategic extra-regional FDI, undertaken with an eye on further global competitiveness, also requires appropriate policy support. This seems even more sensible given that the prevalence and acceleration of borderless digital internationalisation and the increasingly blurred nationality of MNE affiliates are lessening the relevance of regional distinctions.